Benchmarks trade lower in early deals

Indian equity benchmarks have entered into red terrain in early deals on Monday, as traders turned cautious ahead of F&O expiry on Thursday this week. Weakness in Asian counters too added pessimism. Asian markets eased on Monday on expectations that indications of a rate hike could emerge from the the Federal Reserve at its Jackson Hole meet later this week. However, losses in the Indian markets remain capped with traders getting some encouragement with the appointment of Urjit Patel, a known inflation warrior, as Raghuram Rajan’s successor at the Reserve Bank of India. Patel’s appointment is also an indirect acknowledgment of Raghuram Rajan’s work and legacy. Some support also came with Francis Gurry, director-general at the World Intellectual Property Organization stating that India can break into the top-25 rank in the next 10 years. Also, Union Labour Minister Bandaru Dattatreya has said that EPFO will raise proportion of its investments in exchange traded funds (ETFs) from the present 5 per cent and a final decision on the quantum for current fiscal would be taken very soon.

The BSE Sensex is currently trading at 28009.00, down by 68.00 points or 0.24% after trading in a range of 27987.51 and 28143.28. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.08%, while Small cap index down by 0.05%.

The top gaining sectoral indices on the BSE were Realty up by 0.63%, FMCG up by 0.47%, Consumer Durables up by 0.36%, Oil & Gas up by 0.16% and Power up by 0.09%, while Metal down by 0.67%, Auto down by 0.65%, Bankex down by 0.40%, TECK down by 0.39% and IT down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.83%, Cipla up by 1.03%, ITC up by 0.70%, Adani Ports &Special up by 0.57% and Power Grid up by 0.55%. On the flip side, Tata Steel down by 1.40%, Lupin down by 1.40%, Hero MotoCorp down by 1.33%, Maruti Suzuki down by 1.23% and ICICI Bank down by 1.14% were the top losers.

Meanwhile, international global rating agency, Moody’s Investors Service in its latest report has said that it may consider India for a rating upgrade if the government is successful in introducing more growth enhancing economic and institutional reform. Policies like relaxation of thresholds for Foreign Direct Investment (FDI) and a change in the monetary policy framework that fosters credibility will contribute to more stable economic environment.

The report stated that India's policymakers are likely to be successful in their efforts to introduce growth-enhancing, growth-stabilising economic and institutional reforms would lead to the rating being considered for an upgrade. Other measures have been delayed like the Goods and services Tax (GST) and now likely to be implemented with credit positive effects in the medium term. Other reforms have proven more politically difficult so far like land and labour reform.

Last year in April, Moody's had changed India's sovereign rating outlook to 'positive' from 'stable' and it stood at ‘Baa3’ citing reform momentum and Moody’s consider India for an upgrade in next 12-18 months. However, report added that the rating outlook could be revised to ‘stable’ if economic, fiscal and institutional strengthening appeared unlikely, banking system metrics remained weak or balance of payments risks rose.

Moody's said that the positive outlook on rating reflects their expectation that policies will support a more stable macroeconomic environment, with sustained growth accompanied by narrower fiscal deficits, low current account deficits, increased savings and investment and inflation that is within the central bank's targets.

Further, Moody's stated that the government in June had announced FDI liberalisation in nine sectors such as civil aviation, retail and private security services. This was the current government's second round of relaxation in FDI rules. Besides, in past two months the government has taken initiatives like inflation targeting monetary policy and also secured Parliament approval for passage of the bankruptcy, Sarfaesi and DRT laws and above all the long pending GST.

The CNX Nifty is currently trading at 8651.95, down by 14.95 points or 0.17% after trading in a range of 8650.80 and 8684.85. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 1.87%, BPCL up by 1.21%, ITC up by 0.88%, BHEL up by 0.85% and Cipla up by 0.80%. On the flip side, Hindalco down by 1.98%, Tata Steel down by 1.67%, Bank of Baroda down by 1.55%, Lupin down by 1.38% and Grasim Industries down by 1.37% were the top losers.

Asian markets were trading mostly in red; Taiwan Weighted decreased 78.31 points or 0.87% to 8,955.96, Hang Seng slipped 76.26 points or 0.33% to 22,860.96, Shanghai Composite shed 19.73 points or 0.63% to 3,088.37 and KOSPI Index was down by 13.47 points or 0.66% to 2,042.77.

On the flip side, FTSE Bursa Malaysia KLCI rose 0.28 points or 0.02% to 1,687.96, Jakarta Composite increased 7.2 points or 0.13% to 5,423.24 and Nikkei 225 was down by 31.09 points or 0.19% to 16,576.91.